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Joyce Ayieta Lilondo - Masters Student, Kenyatta University, Kenya

Dr Caroline Kimutai - Department of Accounting and Finance, Kenyatta University, Kenya


Micro-financing performs a fundamental function in the sustenance of small and medium enterprises as they serve as supporting vessels in issuing start-ups to small and medium enterprises particularly, to rural unbanked population. Despite this vital role, about 70% of these firms are in the trading sector experiencing numerous hurdles that have slowed their growth and development among which include insufficient operating capital, insufficient industry knowledge, outdated technologies, a lack of company expertise, and lack of production facilities. How microfinance services affect the small and medium-sized businesses financial performance in Nairobi City, Kenya, was the main focus of this inquiry in light of the surrounding circumstances. Specifically, this investigation will determine microfinance credit services effect on small and medium enterprises’ financial performance in Kenya under the context of Nairobi City. The inquiry was anchored on credit rationing theory and resource-based view. The target demographic sample in this study was 120 Small and Medium Enterprises owners which were arrived at via random sampling in Nairobi City. The research was based on descriptive research design. Primary data utilization was adopted and sourced through questionnaires. Checking of the instruments, validity and reliability was necessary. Evaluation of the information was via descriptive statistics including mean, frequency and percentage, and inferential analysis which includes correlation analysis and multiple regression analysis. The utilization of diagnostic tests such as heteroscedasticity, normality and multicollinearity checked the assumptions of regression analysis. The outcome of analysis was presented using tables. Ethical principles relating to research were duly observed. Discovery from the survey indicated that credit services positively and significantly affected SMEs financial performance and therefore rejected the null hypothesis. The study recommends its increase to boost SME financial performance in Nairobi City, Kenya. This will help improve the level of the SMEs financial performance in the city of Nairobi, Kenya.

Full Length Research (PDF Format)